Arguments in favor of mandatory liability insurance

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A breakthrough on potential new gun regulations is welcome news, but the proposals recently announced by a bipartisan group of senators are strikingly narrow. These include urging states to enact more red flag laws, improving background checks for buyers under 21, and expanding the group of sellers required to register as federal gun dealers. Better than nothing, these reforms would nevertheless only address a small fraction of the more than 45,000 deaths and 120,000 gunshot wounds that occur each year in the United States.

The modesty of the ideas on the table is a byproduct of the intense polarization over gun rights, suggesting a need for new approaches. One option, long advocated by some economists, is to require gun owners to purchase liability insurance. This would create a multi-hundred billion dollar incentive for insurers to find ways to reduce gun violence. Compared to other regulations, this requirement might even appeal to some gun rights advocates. The National Rifle Association wouldn’t support it, of course, but it might win support from conservatives seeking a market-based approach that wouldn’t have much of an impact on responsible gun owners.

Firearms insurance would accomplish two goals: first, it would increase the cost of owning firearms for people whose firearms are considered relatively more likely to be used in crimes (by them- themselves or by others), based on an assessment of the risk factors carried out by the insurance companies. It would make those people less likely to get guns in the first place. Second, it would provide a strong financial incentive for gun owners to keep those guns out of the reach of people who might commit crimes with them. Granted, mass shooters won’t be concerned about their future bounties, but many owners would take steps to ensure their guns are well secured. And a 21-year-old with a history of violent behavior might find it much harder to get a gun if insurers insist he pay premiums several times the purchase price of a gun. (Insurance would be a condition of ownership.)

The logic is analogous to that underlying auto insurance. If you drive a car, you can seriously damage another person’s property or even kill them. To discourage reckless driving, the law makes you legally responsible if it happens. For most people, the potential liability exceeds their savings, which is why all 50 states require car owners to carry car insurance so that payments can be made in the event of an accident.

In the case of firearms, insurance would work the same way: if a firearm you own was used in a crime (by you or someone else), you would be responsible for the cost of that crime . The liability could be tens of thousands of dollars in the case of a robbery or tens of millions of dollars in the case of a mass shooting. To minimize legal costs, these liability amounts could be set by a regulatory body, alongside the workers’ compensation program. Gun owners would need insurance to guarantee their ability to pay, and insurers would set the premiums. They would set these rates based on obvious factors like age or past offenses as well as other less obvious ones they uncover. (Perhaps Rotary Club members are 80% less likely to commit crimes.) Bonuses would still be subject to anti-discrimination laws, so they couldn’t vary systematically with race.

I hid from the Texas tower sniper. His successors have found us all.

Liability insurance does not replace other firearms regulations, but it would complement them nicely. Insurance companies would be motivated to perform effective background checks before accepting a contract that could cost them millions if they missed something. They would conduct this search even in circumstances where such checks are not currently required, such as when firearms are purchased from private dealers. Insurers could give discounts to gun owners who show they’ve purchased gun safes, even in jurisdictions that don’t require them, and people whose guns have been used in crimes would face high costs when they get another one, unless they can prove to insurers that the same thing will not happen again.

Economists like the idea of ​​compulsory insurance for firearms because it tackles the problem of “externalities”: impacts on other people that are not part of the usual cost of a good or of an action. In the absence of regulation, for example, why should a factory owner care that steel production generates air pollution? The classic solution is to tax each unit produced by factories by an amount equal to the environmental damage caused by each unit. Steel production will continue, but it will be limited not only by demand for the product, but also by the cost of environmental damage.

Could taxes force gun owners to pay for the externalities of gun ownership? In fact, we can and do tax gun purchases (in 1937 the Supreme Court ruled that it was constitutional to impose what would today be a tax of over $4,000 on sale of a machine gun). But a tax is a blunt instrument: a gun bought by a 55-year-old man who has taken a safety course may pose far less risk to others than a gun bought by a 19-year-old convicted of driving under the influence. influence . Taxes do not make this distinction.

Insurance companies, on the other hand, would. If companies only charged $100 in annual premiums to someone with a history of violent behavior, they would be losing money on the policy, given how often payments would have to be made on behalf of people with such past. On the other hand, if they asked a Wyoming farmer whose gun poses little risk to anyone to pay $10,000 a year, other insurance companies would gladly offer to insure the man’s gun. for less.

Over the years, many state legislatures have debated gun insurance plans, though none have passed. In February, the San Jose City Council approved the nation’s first law requiring residents to purchase coverage for certain accidental discharges. But crimes committed with firearms are far more common than firearm accidents.

It will not always be the owner of the firearm who commits a crime: of the inmates who owned a firearm during their offence, 90% were not the original retail purchaser. Therefore, to reduce gun crime, we should hold gun buyers accountable if others use their gun to cause harm.

Penalizing gun owners if their guns are used in crimes means following chains of ownership. The Tiahrt Amendments, which have been attached to Justice Department appropriations bills since 2003 — they are named after former Congressman Todd Tiahrt (R-Kan.) — prohibit anyone except law enforcement ‘order, to receive the results of the firearms traces conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives. A workable firearms insurance proposal would require modifying the Tiahrt Amendments to allow courts to properly determine liability (and ideally, to allow insurers to better model risk). Where a chain of ownership cannot be established beyond the first private sale, we may still hold the insurer of the last identifiable owner liable. (Compulsory liability insurance does not in principle require amending the Legal Arms Trade Protection Act, which shields firearms manufacturers from legal liability when crimes are committed using their products.)

When a teenager wants a semi-automatic rifle, that’s enough of a red flag

Insurance companies have objected that they generally do not make liability payments for intentional acts. Making a payment for illegal shooting would be like paying a claim for arson, as opposed to accidental fire, they argue. But that’s only a legal concern if insurance compensates a bad actor. It is common to have insurance that covers intentional wrongdoing. That’s why your home insurance compensates you if your home is broken into or burned down by a stranger.

Suicide, which accounts for two-thirds of firearm deaths, presents a challenge to this approach, as paying debts to surviving family members could perversely incite such acts. One solution would require insurers to make payment to another recipient – ​​perhaps, for example, to a fund used to reward victims in cases where firearms cannot be traced to any insured owner. This would still encourage insurers to increase the cost of firearms for people at higher suicide risk, based on their mental health history. (Disclosing this history might be voluntary, but people with low-risk histories probably would.)

Compulsory car insurance does not prevent all car accidents. But it financially encourages careful driving. The system rewards good results – a lack of accidents – and encourages preventative measures such as driver education. Just as drivers with a history of recklessness would pay a higher cost to drive a car, reckless gun owners would pay a higher cost to own a gun.